[00:00:01] Speaker A: You're listening to PTC point of view, brought to you by preferred trust Company, the preferred custodian for all alternative investments. We're here to provide retirement savers like you with the tools you need to succeed. Need a confidence boost when it comes to investing outside of the stock market? Do you want the power to build a tax sheltered nest egg that will last through your golden years? You've come to the right place. Turn up your speakers and turn off cruise control, because we're taking you on the alternate route to investing with your IRA.
[00:00:41] Speaker B: Welcome back to another episode of PTC Point of View, a retirement podcast by Preferred trust company. Today we have Troy Eckerd, who is the CEO and manager of Eckerd Enterprises. Eckerd Enterprises is one of our company partners here at Preferred trust Company, and interviewing him today will be Kerry Cook, CEO of Preferred Trust. All politics aside, you cannot discredit the fact that oil and gas are essential resources in our modern world. What you probably didn't know is that natural resources like oil and gas are also an alternative asset that investors can harness to fuel their retirement portfolios. So that's why we wanted to bring Eckerd enterprises on the podcast today to discuss their investment and how you can invest with them using a self directed IRA. Just as a reminder, preferred trust company performs duties of a custodian, and as such, we do not sell investments or provide investment tax or legal advice. So, everyone, please welcome Carrie and Troy.
[00:01:45] Speaker C: So let's. Let's start first by just introduce yourself. Tell us who you are, what you do, why you do what you do. Give us a little background.
[00:01:55] Speaker D: Well, first off, my name is Troy W. Eckert. I started in the investment world in 1985. I was licensed as a broker for a small reg d firm. Didn't know diddly about assets or markets. I just knew that I had a background in economics and finance. And so I started off working for accredited investors who wanted tax write offs by participating in oil and gas. Seems like a simple initiative. The problem is, oil and gas is incredibly risky, and 99% of the results are outside your control. So it's not like a financial planner who can decide. So what I learned quickly is you can have the best intentions, but if you constantly are at risk because everything else is being done is out of your control, it's a very, very precarious career to be in. So I quickly moved into owning my own broker dealer, deciding that if I'm going to have to be responsible for results, I should pick and choose what product I'm going to offer. I learned very, very core details on due diligence. So I learned how to really ferret out what was a good deal and bad deal from all angles. Ultimately started my own oil company in 1995. And over the last 25, 30 years, I've been drilling oil wells, buying pipelines. In the last five years, specifically, we decided to move completely up to the top of the food chain in oil and gas by buying oil and gas mineral rights. So there's not a well in this country that gets drilled without leasing minerals from a private owner. I decided I wanted Exxon to be my tenant. I wanted Warren Buffett, who owns $20 billion of oxy, to be my tenant, knowing I'm going to always get paid. So we've evolved from tax consideration to expiration to pipelines to forget all the risk. Let's go to pure cash flow, passive income, which is what we've done the last five years. So really, really successful career in the way it's evolved. But to be candy with you, this is a tough, tough industry, and unless you're really familiar with it, you need somebody who's an expert in guiding you in this sector, because it's not something you can pull up online and find out the answers. It's kind of a hidden sector. Very precarious. Gotta be very picky.
[00:03:48] Speaker C: So what makes Eckerd enterprises the specialist in this field?
What's different from you and everybody else out there that's trying to tap into, no pun intended, this opportunity?
[00:04:03] Speaker D: What makes Eckerd different than virtually all other oil and gas sponsors is the fact that we offer such a broad but integrated, expert level of expertise. I mean, I've drilled oil and gas wells for 37 years in eight different states, vertically, horizontally. Old technology, new technology. And the reason that works so good is that when you truly have an integration of expertise, it allows you to understand the economics, the operational issues, and you can get that experience bundled into one central management system that allows you to ferret out the best operators, the best prospects, the best asset class. So that's really important. The other thing is that I believe that the better education that we can provide our investors makes them not only more familiar with and comfortable with the oil and gas sector, but it also does, it makes them some of the smartest oil and gas investors in the market. So they can then measure other oil and gas opportunities into what I believe puts Eckerd as kind of the litmus test of, hey, if this is what Eckert's providing, why don't you do this as well, and as they get smarter and smarter, they quickly ascertain what is a good, solid management team, operating team sponsor, and actually an asset opportunity involved. And then I think, last but not least, is that we think in terms of ten years, not in a deal. And I think that really goes to, in my view, that's probably what's kept me in business for 37 years. I'm not looking to go find a deal, put a pretty bow on it, find 50 clients and sell it, because then they say, what are you going to do next? Oh, I don't know. I got to go find another deal. The way my brain works and the way my company works is we're looking at actually having investors consider that part of their cornerstone platform or their investment portfolio is going to have energy in it at all times. And I've got to be looking 612, 24 months down the road and say, what asset class is going to be beneficial in energy to add to your portfolio to allow you to maintain that balance? It's those two ingredients really, that allows us to be, I think, a far and above leader in the industry with what we do.
[00:05:59] Speaker C: So what does your success rate look like? You said you've drilled over 2000 holes out there. What does that look like for you?
[00:06:08] Speaker D: So, prior to probably 2017, there was three iterations in the industry. So when we started off with vertical drilling back in the eighties and nineties, we were running 65% success rate because we were punching a bunch of holes. But it was expiration, it was risky. Then 3d seismic came about in 1995. So 1995 to about 2002, we were hitting 85% success rate because we could see it better, better technology, better seismic. Then from about 2002 to 2017, the US was running out on gas because we were hitting about 75% to 80% dry holes, which is why our production fell to historic lows. I mean, I was about to go mow grass for a living because they couldn't find oil in the jiffy lube. You know, during that period, it was rough. I mean, it was really, really rough. It's like, who do I hate that I'm going to put in my oil and gas dry hole, right? And then that all changed because of technology. So with the horizontal drilling, the fracking, the stimulation, now they're using computers to drill computers to guide that drill bit within twelve inches, 4 miles in the ground. Now the oil and gas industry in horizontal drilling is running about a 98% success rate. The only thing you have is mechanical failure, really. So a true dry hole doesn't exist anymore in horizontal. It's more of what's your rate of return? So, what I decided is to say, all right, we've gone through this, 30 years of iterations in the change. What's the big advantage today? The advantage is I'd love to drill wells with a 98% success rate. Here's the problem. The middle class of the oil and gas industry died a decade ago. So you used to have small players, mid sized companies, then major billion dollar companies, and because of the cost of these new horizontal wells, that middle class died. They either got aggregated and bought by the big boys, or they just simply went out of business. So now you have mom and pop geologists, or you have billion dollar companies, because now the average well is eight to $12 million per well. So, for me, looking at capital, you and I are in the capital business. We look at, say, if I've got to go drill ten wells and I'm taking a part of them, I need 30 or $40 million to take 25% of ten wells. That's a lot of capital to raise with an uncertainty of results, blah, blah, blah. I said, let's forget. Why don't we become the house? Why don't we buy minerals underneath these major oil companies, get a free royalty interest, 18% to 20% free. Let them take all the risk. And they pay us a check every month, and we have no bills and no holding costs. Well, that mineral market carry was not available until about four or five years ago. And what caused it to be available is the large private equity. The large groups out of Wall street were spending one, two, 5 billion at a time. We had no way to compete.
All of a sudden, the capital markets died in 2018 for oil and gas. And Troy, sitting there with a whole group of accredited clients saying, hey, the runways clear.
And so what we've done since 2019 is we've now acquired $400 million worth of minerals for cash flow and 18% return cash on cash across all portfolios. We own 30,000 net acres, and we have over 1650 wells with zero dry holes. We've done that in almost 38 months. It's off the chart. If I had to say, here's my.
No way I could have predicted. And it's just getting better because the oil companies are.
[00:09:10] Speaker C: Yeah. Where do you see kind of leading into that? You talked about your investors.
Where are your investors coming from and what are they investing in?
And when I say in, I mean, is it a fund? Is it accredited investors only? Like, what kind of opportunities should people expect as an option when they reach out to Eckerd.
[00:09:36] Speaker D: Well, Eckerd has two things you should know. We only deal with accredited investors. We don't deal with any non accredited. We've been doing that for 30 years. I really think non accredited investors probably don't belong in the oil and gas business. They should be buying stocks and public equity because their margins of liquidity are so small they may need the money. And this is not a truly liquid asset. The second thing is that we don't do anything in partnerships or llcs.
I hate llcs and partnerships. For the most part it works in doable things, maybe like in your case with hard money lending, etcetera. In my case, I always worry about the corporate governance being so one sided toward the sponsor that when I get involved, I've kind of walked into a bunch of tar and I can't get off me. So when you buy, you buy minerals. With our company, we basically assemble a grouping of minerals. We call it a portfolio, but really it's just a collection of fractional interest. You'll invest capital and you own a piece of each one of those mineral tracts, but it's deeded entitled. You got a purchase sale agreement, it's yours. It's like real estate. If you don't like my ugly face in a week, you can assign those out. Now you get your checks from the oil company, but what we do is we handle the management for free. But it's truly real estate. It allows you to do 1031 tax exchanges, it allows you to invest in self directed iras, gives you the ability to pick and choose small portfolios based on timing, entry and exit. And that's really important because we're finding out now, in today's economy, depending on who you decide to get married to, getting divorced is a lot harder. So you're in syndications and deals that aren't working. You're like, now, how do I get my money out? How do I sell? How do I contact them? In our case, we've got over 1000 clients. We started with 120 clients three years ago. Now we have probably 1100 clients. Today we're picking up 50 to 100 clients a month. But what we've been able to do is create a system. We built our own mineral app. You can go online, see your minerals every month, your checks, your revenue, your deeds. It's the most sophisticated app in the industry, but we did it for this reason. Troy gets hit by a bus. Troy decides to retire and go home. I'm on Saturday night talking to my wife, says, how are we doing? Well, this is not working well, how's our minerals? Let me pull it up online. I can tell you how much they produce. Last week. Yeah, I treated Kerry like. I feel like you do your part. I treat our investors as if I'm investing. What does Troy want? I want to know my money safe. I want to know that I own it. I want to know what the wells are producing. I want to know that I can verify it. I want to see my money. So we manage standpoint of no partnerships, direct ownership, accredited only. And we're incredibly what I call front facing. We're always in front of our clients saying, I'm the CEO, here's my cell phone number. Call me anytime. That is very welcoming to most investors in an environment today. Whereas talk to the recorder, send me an email. Right?
[00:12:10] Speaker C: Yep. You said they either love you or hate you. I have those same sentiments. That's how people feel.
[00:12:16] Speaker D: Goes like this, Gary.
[00:12:17] Speaker C: Yeah, it's always a back and forth. But you know what? That's okay if you don't like it. I mean, we're at least very straightforward individuals, right. And so we know who we want to deal with. And this is specifically an accredited investor opportunity. So we want to make sure that our listeners understand that. But there's a reason for that, right? This is not intended to be. I'm going to get in and then I need liquidity in two months.
You're not going to get it. This is an illiquid opportunity. How long will their funds be tied up?
[00:12:52] Speaker D: Well, so you're buying real estate and the question is, what's the economic value of that real estate? So the horizontal wells that we buy, mineral owners have mineral own rights under, they'll have a typical economic life at today's commodity prices of about 20 to 50 years. So the question is, you know, are they going to produce the same over 50 years? Of course not. You're draining in an Olympic sized swimming pool of oil and gas. But the reality is that as an owner of minerals, you have no holding costs. So what you're really saying is if I'm going to deploy capital and minerals, what does it look like for a full return of 100%? My capital so I can go put deploy in something else and then is there an exit strategy? Can I sell my minerals someday? The answer is yes and yes. So what a lot of partners are doing, they're buying minerals. They're using a 1031 exchange by selling traditional real estate, rolling it into minerals. They're using the self directed IRA, putting that money to work in something that has no cost. And then they're saying, well, four, five, six years out, what if I want to sell a third of my portfolio app? So what we've done, it hadn't been introduced to the market. It'll be introduced in about 30 days. We've created a peer to peer online market. So now you can put your mineral portfolios on our app and say, hey, I want to sell $100,000 of portfolio number ten. You now have 1100 buyers and minerals going online and you can set the minimum price, the bid buy now price, and then that will become a third party marketplace by December. And the idea is you get to choose when, if in the price you want to liquidate. So if you believe distressed real estate is available in two years, you can start positioning your mineral. Say, I will liquidate some of my premium cash flowing minerals at a right price to buy traditional or blah, blah, blah.
I'm trying to prevent what I call a no exit investment, which means you don't get out because it's sticky glue. What I want is minerals to be a tool. Energy is your cornerstone. But I can get in when I want, I can liquidate what I want and I can use it like other assets to move money around as I see fit. My whole job is to create that opportunity inside of what Eckerd does. And right now our clients are super excited about our peer to peer market opening up in middle May. And I think when we open up to the third party market, that's when we're really going to see a dynamic market change in what we do.
[00:15:00] Speaker C: Yeah, absolutely. That's huge. I've not heard anybody else doing that. So that even close. Yeah, that'll be very interesting. So.
[00:15:11] Speaker D: I'm such a weird, I'm such a weird guy. Kerry, I'm thinking about what I'm going to have lunch in 2025. I mean, I'm not.
[00:15:17] Speaker C: I know, I know.
I think the last time I was talking to you, you were, what were you doing? You were making money off selling oil tanks, I think, or something crazy. You're always in.
[00:15:32] Speaker D: We still have it.
[00:15:34] Speaker C: Okay.
[00:15:34] Speaker D: I figured we still have our tank business. We were making tanks back in 2016 and at the time there was 26 tanks fabricators in Oklahoma. Now there's two, us and one other company. And I'm so contrarian. When the market imploded in 2018, we had record sales for tanks. The next three months, not a single tank sold. And I said, the capital's left. The oil and gas moves. It's in total destruction. A year before COVID so I told my son in law, who's my partner, I said, I'm going to put in a million dollars. We're going to buy every scrap of steel. It's going to be the cheapest deal, cheapest labor. Build every tank you can build. Fill the yard with tanks. He goes, why? We're not selling them? I said, tanks don't become antiquated. And when they want to go back to drill, there'll be no tanks left. So fast forward 14 months. We get a call in about March of 2021. I said, we'll take every tank you have in the yard. I said, well, great. It's about 50% higher prices. We'll take every tank. Cash buyer sold the entire inventory in one month. My son in law looked at me and says, how did you know? I said, tanks, they have to have them. And there's nobody else make them. Now there's two tank companies, us and one other, and we have a full order. Every single month, the tank's going out the door. It takes a lot of courage. Like, in your case, you run your business, you have ignite funding. You have preferred trust. You've got to see a vision down the road, because most investors or doctors or lawyers or engineers, they're really good at what they do, but they don't take the time to see what's really the arbitrage or opportunity. So they got to trust you. They've got to trust me and say, I need an expert that can do x, y, and z, and they have a vision that says, how do I get past the curb or the hill and what's going to be on the other side? That's what. You know, I don't know how old you are. I'm 58. I'll be 59 in a couple of months. If you look at most sponsors these days, they're not even 45 years old. And if they are 45, they've only got five or six years experience in the particular asset class.
I say that people got really google.com smart about 20 years ago. Oh, you want heart surgery? Let me google it. I'll operate on myself tonight. They've taken the value out of experts like you and I, and they started saying, I can on my own. Well, now they're finding out that really work. I mean, I need the old guy with scars that's been hunting for 30 years to tell me where the birds fly. You know? That's the way it works.
[00:17:38] Speaker C: Absolutely, absolutely. So talk to me a little bit about what are your investors really making you admit you threw around 18%. And is that real? I mean, most of us are going to look at this and go, that guy's full of shit.
Are you full of shit or are we really going to make that kind of money?
[00:17:57] Speaker D: My clients are doing better than that. So let me tell you why. We started about three and a half years ago, portfolios. For the most part, let's call it 85% to 90%, of our portfolios that are over 24 months are averaging 30 plus percent annually, annually. The reason why it's 18% is because when you figure the math, you take all the minerals that are in pay, but you add all the new minerals you bought, so your denominator gets bigger. So it's dragging down my return. If I were to take out the last ten portfolios and not count them, we're running close to 25% cash on cash per annum for every portfolio. Why is that? When you're a cash buyer, the sellers are looking for a purchase sale agreement. The seller of the minerals is looking for a purchase sale agreement, and they want to be able to know they can close. Most buyers try to buy it and flip it so they don't get a good price. We walk in like a hammer and say we're spending 20 or $30 million a month, we can close in seven days and we can buy up to 20, $30 million at a time. In doing that, we pull the price down by probably 20% to 50% per acre, because they know I have a known buyer, blah, blah, blah. We also believe in a very, what I call it, well, it's just proprietary way of doing minerals. We have a system that's worked incredibly well, a very disciplined model, and as a result, all of our portfolios, minus about five that we bought in 2019, almost every one of our portfolios is at and far exceeding any of our model performance. And quite frankly, it's going to do much better than that. Because the 18% cash on cash was including 2020 and 2021, we're selling oil for $60 a barrel on a dollar 65 gas. So if we were to go to today's prices, we're probably closer to 25 or 30% cash on cash. So the reason why you say, am I full of shit? This is my problem with all the other oil and gas people. You tell me what you're going to do, show me you've done it, once, you tell me you can get this done it, I'll send you my portfolio and show you every single portfolio down to the cash. We've got about 400 million currently under management, about 320 million is actually in pay. That 320 million is going to kick off about $50 to $75 million cash on cash this year alone, just from. Well, no costs, no expenses. And it's going to get much better. And I think that what we've done is put ourself in a position because of massive opportunity in minerals. We think we can keep doing this for the next decade, specifically because of the proprietary method and the way we do business. And so, never had it this good, never made this much money for clients, never had this lower risk. It's like if you took a drawing board when you're 25 and say, here's the perfect dream scenario. It's all happening now. But I credit that to 37 years in the business. Not because I'm the smartest guy, I just think because I've had enough resilience to wait till the opportunity presented itself.
[00:20:35] Speaker C: Yeah. And here it is. All right. Where is this land located?
[00:20:40] Speaker D: So in the US, there's only about 30 states that have oil and gas productive because of geology.
Most of the big oil and gas basins are in Louisiana, Ohio, North Dakota, Wyoming, etcetera. Right. The deal is you can buy minerals in any state that has oil and gas, but you got one big component you got to think about. What does the state rules provide you per state? So if I've got an anti fossil fuel state like Colorado, I don't care how good the oil and gas is, I'm not buying there because that's an added risk I can't control and I can't measure. So we stay in Oklahoma and Texas because they're both so pro oil and gas. When Biden makes his decisions, they go, sorry, the state overrules. You can't change the way we do our business. We only buy private land, minerals we don't mess with federal. And we only buy in states that are 100% oil and gas. And we buy in what we believe the two richest oil and gas basins that provide the highest yield for the lowest cost per acre bought. So we have probably 90% of our portfolio in Oklahoma and the Anadarko basin. We now have started about a year ago in the permian basin, which is basically Saudi Arabia. The US, that is Permian basin is like Highland park. It's expensive, all the big boys are there, but it's ten times the size of Oklahoma. So we're probably the number one buyer in Oklahoma. We're just a piss aunt over in Texas. But between the two, we should do another $250 million this year in mineral acquisition between the two states.
[00:22:07] Speaker C: Okay.
And how do investors get a hold of you?
[00:22:12] Speaker D: Well, don't call my probation officer. Just call me directly.
So this is important. The way I run my business is I have salaried wealth managers and they don't get paid based on what you invest. I could care less if it's 25,000 or 2.5 million. And you can email us at the
[email protected]. dot. You can email me directly t eckerdeckardenterprise.com dot. You can call the 800 number. It's been around since 1991. My 800 number is probably older than most people that are sponsoring deals you're buying.
And the deal is we're under no pressure. Like today, we were at dinner last night in California. We had several partners saying, I'm ready to put some more money in minerals. We said, we have nothing to sell. We are totally out of product. But what we're doing is that we're being so patient and so disciplined. We want you to contact us, email us, let us take our time and walk you through what's going to happen. When and if you're ready, let us know. We are probably the least pressure we've ever been in 37 years. But at the same time, because it's a very unique industry, people got to get their head around it. You got to really start. Like you could talk to me about hard money loans. I'm going to get it, but then I'm going to go, you really need to sit me down for a couple hours and draw it out so I really get what you're doing, right. And I think that's the thing about oil and gas, is I want to start, I want to email you, but I don't want a sales pitch. I don't want to be new product jammed down my throat. Tell me why I should be in oil and gas. Tell me how it works. What's my risk? What's the cash flow? I'll summarize it for you. You write a check. Six to nine months later, you get your first revenue check. For the previous five months, you're going to get a check every month. So twelve checks a year, twelve Ach deposit year and 110, 90, 915 percent of your income is tax free. And you're going to get checks for 25 to 50 years. We manage for free one time check. No additional fees, no equity splits, no back ends, no carried interest. What yours is yours, what's ours is ours. And what we do is we manage it for free. And we send out checks every single month on the 25th of the month, and we give you 1099. Everybody goes, all right. Sounds too good to be true, Troy, what can go wrong in minerals? So here's my joke. I say, I'm Leo DiCaprio. Don't catch me if I can, and I'm a fraud I don't have. Anyway, it's the biggest Ponzi scheme you've ever seen. Second to that, I'm an idiot. I couldn't buy a mineral over an oil and gas flow to save my life. So you're buying minerals that I paid $100 for, and I'm selling to you for 15,000 an acre, and you're gonna lose all your money. And the third thing is, is that somebody comes up with a tablet, they drop in saltwater. Now, that's a new energy source, and we don't need a fossil fuel anymore. So that's really the three things go wrong. Horrible fraudulent activity at the manager's level, complete encompassing or some kind of alternative energy that may make fossil fuels less valuable tomorrow. Absent those three black swan, catastrophic, can't happen events, you're going to make money every single day. And it starts about six months after you write the check.
[00:24:53] Speaker C: When do you expect to have more product available?
[00:24:57] Speaker D: So what we've done, great question. What we've done is we built up an internal inventory of about $30 million that we've already bought. The other thing I should point out as a sponsor, you don't buy anything that we haven't already paid for. So we're 100% at risk. If everybody said, I'm not buying tomorrow, I own that free and clear. But what we like to do is we like to buy minerals with different maturity, maybe a mineral lease that has three wells, brand new drilling, maybe as another well with four wells permitted. We'll pick and choose in the areas we like. We'll bundle it into a portfolio that we think can make twelve to 30% a year, and then we'll put it out in the small portfolio. We think we're going to have one in about two weeks. We'll probably do another one in April. But here's why we're slowed down. The sellers still think it's last November at $95 oil and $9 gas. So as a cash buyer, we're saying we're not going to offer you that price. Well, they don't believe us. They think we're trading. I said, let's file any new leases and they'll know we're not really buying. Now they're starting to call us, but we truly believe there's a big changeover happening in the energy space as a result of the banking collapse. All banks are risk adverse. The traders can't buy contracts for oil and gas. The price oil is sinking. It's perfect opportunity for us to buy because I love bad news for the seller when they have to sell. I'm like, it's going to go lower. We could end up driving all electric cars running by rats and an engine. So you better sell to us today. It's all about just timing. We're very patient. So we believe portfolio in two weeks, another portfolio in April, and then we'll probably do about another ten portfolios about every two or three weeks for the rest year. We just take our time and really a lot of fun.
[00:26:28] Speaker C: Okay. I wouldn't have put you and patience in the same sentence, but I think when it comes to people's money, me neither. But when it comes to people's money in our own, we are very patient. We want to get the right price.
[00:26:44] Speaker D: They need us patient with their money, but they need us acutely aware and aggressive when opportunity and arbitrage presents itself.
[00:26:51] Speaker C: That's right.
[00:26:52] Speaker D: So where we come in, value, I believe this because you and I, I think, are a lot of the same mindset where you and I come and value is, we know our business. We know it better than anybody else. We know when the market says don't step in. We know when the market says full body in. And we measure that by our clients because the candid truth is, the 400 million that we've raised in the last three years, we could have probably raised $2 billion if we just been careless, absolutely fearless. We had to literally be disciplined to say, this is as fast as we're going to go. And I think that's a character you and I both contain.
[00:27:24] Speaker C: Absolutely, absolutely.
[00:27:28] Speaker B: Preferred trust company is hosting an event here very soon. It is called pillars of finance. Pillars of Finance is an investment community created by industry experts for investors of all kinds. This year it is taking place virtually on April 4 at 03:00 p.m. if you would like to learn more information, go to pillarsoffinance.com or click the registration link in the podcast description. And once again, thank you for listening to PTC point of view.
[00:27:58] Speaker C: All right, what have I not asked you that our listeners need to know about you?
[00:28:04] Speaker D: What does the federal government, what can they do to derail oil and gas? And the second one, I think is the biggest question I'm getting the last two weeks is how does the banking crisis affect minerals? So let me tell you how it's going to work. If the federal government tries to balance the banking industry, which is not going to happen, they don't have the bandwidth for it. The question would be, is how do we know the revenue we're getting is not going to be held up or in a bank that gets caught upside down? So here's the way I like it. Every single oil company that operates wells and the minerals that we own, there are tenants. These are Exxon and chevron and oxy. They're going to get their money because why? If you don't give the money to the major oil companies, your production will fall, your economy will fall. And here's the cool part. No oil company can take their revenue without paying mineral owners. First check comes in from the buyer, they put our money to the side. They get their money. They must distribute our money every single month. Because why? If they don't, the least they secured is void, and I get all their oil wells for free. So what I've told the partners the last 18 months, I was thinking the banks were going to collapse two years ago. And the reason I felt that way is that the economics just don't make sense anymore. So, for me, we did a review of our banks about a year ago. We split our money between three different banks to make sure we recovered, and today between the government regulations. That's why we stay with private land and the banking crisis. We think we're in the position that no matter what happens to apartments and loans, etcetera, we're in the position that nothing stops our cash flow. And we actually, Carrie should know. We went to one of our smaller banks, they're about a billion dollar plus bank, and we said, you have a program where we can pay to cover our cash in all of our accounts, up to $150 million. We'll take that insurance. We paid the money to be covered up to $150 million in all of our aggregated accounts. Because I don't want any chance my money or my partner's money ever gets caught up, suspended, or lose any money as a result of a banking collapse. So we were very preemptive on this months ago.
[00:30:00] Speaker C: Yeah, it's ironic you say that, because we just split to three banks, too. Did you? Yeah, about nine months ago. Just kind of looking, looking at this grand scheme of things. And, you know, you need to diversify, especially when clients are depending upon, you know, income coming out to them every single month. You have to make sure you're protecting, protecting their income.
[00:30:23] Speaker D: Well, you, you and I have been through 2008. Things happened in 2008. If I had to write a horror story, I was never evict anything to happen, and things happen that I never thought of. So that's pretty fresh for me, even though it's 15 years ago. So I said, I know, folks, this smells like zero eight on steroids. So we started doing things in preparation and that same thing you did. And now these younger investors are going like, oh, that can never happen. Really? Get ready.
[00:30:46] Speaker C: Watch. Yeah, watch the headlines. Because they're coming.
[00:30:49] Speaker D: That's correct.
[00:30:50] Speaker C: Yeah, absolutely. How many clients do you have that use self directed iras?
[00:30:55] Speaker D: You know, we talked about that last night. I think we have probably 75% of our investors use self directed iras. We had a big surge in 1031s. But one of the things we're encouraging all investors out there is to go find a company like preferred trust. Go find a way to take your IRA money, put it to work. The other big advantage that a lot of our investors discovered about two years ago is that you can buy minerals today, get a third party independent evaluation, and you can actually do that traditional IRA. Convert it to a Roth. It's about a 45% to 50% reduction in value, which saves a mountain of taxes. And the report's probably an inch thick, which, in my view, will stand up against any IR's challenge or any kind of banking challenge. So what happens is that the self directed IRA, I think, is a completely underutilized tool that everybody with a retirement plan should be working on. And I highly encourage anybody listening, get busy, move the money open account and start figuring how to run your own future, because quite frankly, there are great assets that qualify. But if you don't get moving, you're going to miss the boat on quite a bit of it. So I highly recommend anybody listening to do it immediately.
[00:31:59] Speaker C: Absolutely. And especially your high net worth individuals. If they need any help on that conversion that coined the backdoor IR or backdoor Roth, let us know. We certainly can help with that and educate you even more about that if need be. If you're not getting that education already, please pick up the phone. Phone call, ask. Utilize every resource that you have, because if you have an opportunity to have tax free income in your future, I mean, who, who in their right mind wouldn't take advantage of that? So use it. The one gift government's given us, high income earners, take advantage of it.
[00:32:37] Speaker D: I want to give you an example, Kerry, that I think your listeners ought to hear. So we have a client's been with us 15 years. He's probably worth close to a billion dollars and been a long term client. And so we were having a conference, and we started talking about dudes and self directed Ira, and he goes, what's that? I go, what are you talking about? What's that? You're super rich. You have money everywhere. You're 83 years old. And he goes, I had no idea I could do that. He goes, I've got seven figures times ten of myself. My IRA started using, goes, well, my God, I didn't even know I could do all this stuff. Now, he's obviously older, he's limited by constraints and all that kind of stuff. But the key is we're finding really sophisticated investors. Didn't even know they could do this.
[00:33:10] Speaker C: No, yeah, I know.
[00:33:12] Speaker D: So we're definitely encouraging people to say, take maximum value of what the government gives you, which is the utilization of a self directed IRA.
[00:33:19] Speaker C: Yeah, I think a lot of us high income earners just assume that you cannot use an IRA. We do. We think our income has removed that option from us. And to some degree, they are correct. Right. We can't contribute to a Roth IRA, but we certainly can convert it from our traditional to a Roth. So anybody out there that thinks that you can't, you absolutely can. It is definitely not talked about very much. And I think that's why the IR's put that $10 million cap on it, because I think we did start educating a little bit more about it. And that's kind of why they're like, whoa, hold on a second. We don't want the wealthier to get wealthier, but, yeah, utilize the resources that are available to you. For sure.
[00:34:07] Speaker D: The last thing I would say is that these investors out there, they really need to know there's a lot of custodians in the self directed IRA market. But since we are the inbound receiver of those transactions, I'm going to just tell everybody, you got to find a company like preferred trust, because the reality is a lot of these custodians live on fees, and their fees are going down. And I want somebody who's going to answer the phone, give me solutions, provide that Q and A, and really know my money is not only safe, but they're going to make those executable transactions on time. And we've had a lot of great compliments about your firm. We've had a lot of great compliments about a couple other custodians, but eight out of ten have been kind of not so good a story. So we do our best to say, can't tell you who to go to, but we know there's three or four that are exceptional in what they do and prefer. Trust is at the top of the list.
[00:34:53] Speaker C: Yeah, we appreciate that. Thank you very much.
[00:34:56] Speaker D: You're welcome.
[00:34:56] Speaker C: Certainly we understand an alternative space, so much so that we sell alternatives with another company. Right. So we get it. We understand the timing, we understand the fees. We understand what education you need to have, at what level. So if you have any questions, like I said, reach out to us, let us know. And Troy, thank you so much for giving our clients an opportunity to learn a little bit more of the 101 with 30 years history on mineral rights and how you could invest in mineral rights.
Really, truly appreciate it. I think our listeners will get a lot out of this and certainly they can reach out to Eckerd Enterprises if they have any questions. Sounds like you're going to have some opportunities coming out here in the very near future and for the rest of the year. So please, everybody take a chance. Look at it. It's not too good to be true. It's real. We have clients here at preferred trust company that invest at Eckerd Enterprises. We see the funds coming back into their iras. So it is a proven track record. And I will go on record to say we appreciate working with organizations like yours. So thank you very much for your time today and we will talk to you very soon.
[00:36:10] Speaker D: Thank you so much, Gary. You'll have a great time. And thanks again for hosting me. I appreciate it.
[00:36:14] Speaker A: Thanks for joining us for another episode of PTC Point of view where retirement savers meet alternative investments. Know someone who's struggling with a retirement strategy? Tell them about our show. Can't wait for the next episode. To learn more, visit our
[email protected], or give us a call at 888-9992.
